In the UK, Marks & Spencer (M&S) aims to turn Christmas shoppers into regular customers by implementing a strategy that includes competitive pricing and product innovation. Despite attracting millions of customers during the festive season, M&S has historically struggled to retain them in the new year when shoppers return to other supermarkets. This year, M&S has seen a significant increase in grocery sales, with 12.8 per cent growth in the 12 weeks leading up to December 2, making it the third-highest after Aldi and Lidl.

Operational improvements yield results

Buoyed by the success of its revamped supply chain, which has allowed for more competitive pricing, M&S plans to capitalise on its improved position. The company's shares have more than doubled in the current year. Ian Lance, a fund manager at Redwheel, M&S's second-largest investor, sees an opportunity for M&S to convert occasional shoppers, especially those during Christmas, into regular year-round customers.

M&S CEO Stuart Machin, who took over the food business in 2018, is leading efforts to reshape the company's image from an upmarket occasional option to a destination for weekly shopping. The strategy involves selling 200 essential items at prices comparable to mainstream competitors. By April 2024, M&S plans to introduce 1,400 new product lines, constituting 20 per cent of its total range. Additionally, over 1,000 quality upgrades are planned, with more than 800 already implemented.

Diversification initiatives

M&S aims to expand its presence in traditionally weak areas, such as frozen and homecare products, where its market share is currently low. The company is also investing in larger and refreshed stores, including those in out-of-town retail parks. Furthermore, M&S is strengthening its online presence through a joint venture with Ocado.

Supply chain efficiencies, including savings from the acquisition of logistics operator Gist and buying synergies with Ocado, are helping M&S offer better prices. Consumer perception of the value and quality of M&S's food has increased since Machin launched the strategy in 2018.

According to Alex Freudmann, M&S's managing director of food, recent category upgrades have yielded positive results, with notable increases in biscuit and soft drink sales. The overall strategy aims to create a virtuous circle, attracting new customers and improving operational efficiency. While M&S has traditionally had a monthly customer base of 5.5 million households, the goal is to grow this to the festive peak of 8 million households. To achieve this, M&S needs to convince shoppers like Bev Griffiths, who usually buys major brands not offered by M&S, to make regular visits beyond the Christmas season.

(With Reuters Inputs)